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Bloomberg recap  on Archegos Capital. 

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From his perch high above Midtown Manhattan, just across from Carnegie Hall, Bill Hwang was quietly building one of the world’s greatest fortunes.Even on Wall Street, few ever noticed him -- until suddenly, everyone did.

Hwang and his private investment firm, Archegos Capital Management, are now at the center of one of the biggest margin calls of all time -- a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink.

Hwang’s most recent ascent can be pieced together from stocks dumped by banks in recent days -- ViacomCBS Inc., Discovery Inc. GSX Techedu Inc., Baidu Inc. -- all of which had soared this year, sometimes confounding traders who couldn’t fathom why.

One part of Hwang’s portfolio, which has been traded in blocks since Friday by Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co., was worth almost $40 billion last week. Bankers reckon that Archegos’s net capital -- essentially Hwang’s wealth -- had reached north of $10 billion. And as disposals keep emerging, estimates of his firm’s total positions keep climbing: tens of billions, $50 billion, even more than $100 billion.

It evaporated in mere days.

“I’ve never seen anything like this -- how quiet it was, how concentrated, and how fast it disappeared,” said Mike Novogratz, a career macro investor and former partner at Goldman Sachs who’s been trading since 1994. “This has to be one of the single greatest losses of personal wealth in history.”

Late Monday in New York, Archegos broke days of silence on the episode.

“This is a challenging time for the family office of Archegos Capital Management, our partners and employees,” Karen Kessler, a spokesperson for the firm, said in an emailed statement. “All plans are being discussed as Mr. Hwang and the team determine the best path forward.”

The cascade of trading losses has reverberated from New York to Zurich to Tokyo and beyond, and leaves myriad unanswered questions, including the big one: How could someone take such big risks, facilitated by so many banks, under the noses of regulators the world over?

One part of the answer is that Hwang set up as a family office with limited oversight and then employed financial derivatives to amass big stakes in companies without ever having to disclose them. Another part is that global banks embraced him as a lucrative customer, despite a record of insider trading and attempted market manipulation that drove him out of the hedge fund business a decade ago.

A disciple of hedge-fund legend Julian Robertson, Sung Kook “Bill” Hwang shuttered Tiger Asia Management and Tiger Asia Partners after settling an SEC civil lawsuit in 2012 accusing them of insider trading and manipulating Chinese banks stocks. Hwang and the firms paid $44 million, and he agreed to be barred from the investment advisory industry.

He soon opened Archegos -- Greek for “one who leads the way” -- and structured it as a family office.

Family offices that exclusively manage one fortune are generally exempt from registering as investment advisers with the U.S. Securities and Exchange Commission. So they don’t have to disclose their owners, executives or how much they manage -- rules designed to protect outsiders who invest in a fund. That approach makes sense for small family offices, but if they swell to the size of a hedge fund whale they can still pose risks, this time to outsiders in the broader market.

“This does raise questions about the regulation of family offices once again,” said Tyler Gellasch, a former SEC aide who now runs the Healthy Markets trade group. “The question is if it’s just friends and family why do we care? The answer is that they can have significant market impacts, and the SEC’s regulatory regime even after Dodd-Frank doesn’t clearly reflect that.”

Archegos established trading partnerships with firms including Nomura Holdings Inc., Morgan Stanley, Deutsche Bank AG and Credit Suisse Group AG. For a time after the SEC case, Goldman refused to do business with him on compliance grounds, but relented as rivals profited by meeting his needs.

The full picture of his holdings is still emerging, and it’s not clear what positions derailed, or what hedges he had set up.

One reason is that Hwang never filed a 13F report of his holdings, which every investment manager holding more than $100 million in U.S. equities must fill out at the end of each quarter. That’s because he appears to have structured his trades using total return swaps, essentially putting the positions on the banks’ balance sheets. Swaps also enable investors to add a lot of leverage to a portfolio.

Morgan Stanley and Goldman Sachs, for instance, are listed as the largest holders of GSX Techedu, a Chinese online tutoring company that’s been repeatedly targeted by short sellers. Banks may own shares for a variety of reasons that include hedging swap exposures from trades with their customers.

Goldman increased its position 54% in January, according to regulatory filings. Overall, banks reported holding at least 68% of GSX’s outstanding shares, according to a Bloomberg analysis of filings. Banks held at least 40% of IQIYI Inc, a Chinese video entertainment company, and 29% of ViacomCBS -- all of which Archegos had bet on big.

“I’m sure there are a number of really unhappy investors who have bought those names over the last couple of weeks,” and now regret it, Doug Cifu, chief executive officer of electronic-trading firm Virtu Financial Inc., said Monday in an interview on Bloomberg TV. He predicted regulators will examine whether “there should be more transparency and disclosure by a family office.”

Without the need to market his fund to external investors, Hwang’s strategies and performance remained secret from the outside world. Even as his fortune swelled, the 50-something kept a low profile. Despite once working for Robertson’s Tiger Management, he wasn’t well-known on Wall Street or in New York social circles.

Hwang is a trustee of the Fuller Theology Seminary, and co-founder of the Grace and Mercy Foundation, whose mission is to serve the poor and oppressed. The foundation had assets approaching $500 million at the end of 2018, according to its latest filing.

“It’s not all about the money, you know,” he said in a rare interview with a Fuller Institute executive in 2018, in which he spoke about his calling as an investor and his Christian faith. “It’s about the long term, and God certainly has a long-term view.”

His extraordinary run of fortune turned early last week as ViacomCBS Inc. announced a secondary offering of its shares. Its stock price plunged 9% the next day.

The value of other securities believed to be in Archegos’ portfolio based on the positions that were block traded followed.

By Thursday’s close, the value of the portfolio fell 27% -- more than enough to wipe out the equity of an investor who market participants estimate was six to eight times levered.

“You have to wonder who else is out there with one of these invisible fortunes,” said Novogratz. “The psychology of all that leverage with no risk management, it’s almost nihilism.”

I'm sure this is the only case we need to be worried about.

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That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if o

I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the l

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5 hours ago, Hmmm said:

don't know shit so maybe listen to the opposite, but there's the phrase "sell in may and go away".  based on historical yearly averages or some such? most of your portfolio looks to be long term investments and if you don't need the money, then maybe hold with it.  i think it's more difficult to time the dips with long term plays but i'm a noob.

ive heard this as well, but the data on the broad indices do not support it.  the theory is that people start to sell off to pay taxes.  recently, theres bene way better/worse reasons to sell of equities !

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8 hours ago, Incredulity said:

If you hold a year your cap gains rate goes from regular income to long term (20%).  Depending on your income tax bracket that can be significant.

 

9 hours ago, Hmmm said:

don't know shit so maybe listen to the opposite, but there's the phrase "sell in may and go away".  based on historical yearly averages or some such? most of your portfolio looks to be long term investments and if you don't need the money, then maybe hold with it.  i think it's more difficult to time the dips with long term plays but i'm a noob.

I am not Surly 1% but doing well. 24% thanks to marriage. To me liquidating and getting a 35k+ tax hit is such a ball kicker 

My gut says to hold it and chill

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15 minutes ago, nineliveslost said:

 

I am not Surly 1% but doing well. 24% thanks to marriage. To me liquidating and getting a 35k+ tax hit is such a ball kicker 

My gut says to hold it and chill

How will that 100k+ tax bill be further down the road? My point is, the tax won’t go away, quite the opposite, unless you lose all your gains. Once you reach long term capital gains, you  have to decide when it’s best to get out, knowing Uncle Sam is waiting for his cut.

I’m no tax pro but I can tell you the bigger that tax bill gets, the more difficult it will be for you to sell if that’s your main hesitation. Just set the money aside once you liquidate, it’s part of the game we play.

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42 minutes ago, Coelenterate Fuccboi said:

How will that 100k+ tax bill be further down the road? My point is, the tax won’t go away, quite the opposite, unless you lose all your gains. Once you reach long term capital gains, you  have to decide when it’s best to get out, knowing Uncle Sam is waiting for his cut.

I’m no tax pro but I can tell you the bigger that tax bill gets, the more difficult it will be for you to sell if that’s your main hesitation. Just set the money aside once you liquidate, it’s part of the game we play.

damnit that makes sense. But then I have to figure out WTF to do with 130K to make more money. Reinvest ?Bitcoin? Pay off house and cars? Strippers and Coke? 

Right side up on houses and cars , but the balance on 3 cars and house is 102k. APR on House is 2.6%, Cars is 2.95%. Maybe liquidating and getting completely out of debt and saving me 4k a month

I mean I got completely lucky and fortunate to decided to throw a big chunk of our life's savings into stocks when they went into the shitter, now I have a nice return and don't know what the fuck to do with it that makes me more money.

 

Might be financial advisor time....

Edited by nineliveslost
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I think you could do a hell of a lot worse than selling when the market is at all time highs and getting completely out of debt.  Sure those stocks might continue to go up after you sell, but I don't see how you would ever regret getting debt free.  No need to pay a financial advisor a cut to tell you that...

Just my $.02

@nineliveslost

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1 hour ago, nineliveslost said:

damnit that makes sense. But then I have to figure out WTF to do with 130K to make more money. Reinvest ?Bitcoin? Pay off house and cars? Strippers and Coke? 

Right side up on houses and cars , but the balance on 3 cars and house is 102k. APR on House is 2.6%, Cars is 2.95%. Maybe liquidating and getting completely out of debt and saving me 4k a month

I mean I got completely lucky and fortunate to decided to throw a big chunk of our life's savings into stocks when they went into the shitter, now I have a nice return and don't know what the fuck to do with it that makes me more money.

 

Might be financial advisor time....

Surly answer is strippers and coke, of course.

 

Real answer is take the windfall and pay off your debt.  That's the exact same a clipping a 2.6-2.95% dividend(actually better because your not paying taxes on the dividend)

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27 minutes ago, Incredulity said:

Real answer is take the windfall and pay off your debt.  That's the exact same a clipping a 2.6-2.95% dividend(actually better because your not paying taxes on the dividend)

This is definitely what I'd do. You already feel lucky getting that amount, and now you have a chance to give yourself a ton of security, lock in 2.8% or so, plus you'll have 4k extra per month to spend or invest however you wish. 

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Take that 4K/mo and reinvest in a balance portfolio.... of GameStop leaps. But seriously if any of my longshot plays hit that’s my plan, sell off and reinvest it in balance

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ok. Plan moving forward is to set price sell limits and liquidate to 150-155k. Assume 25-30k for capital gains. Pay off all debts (100k), stash 20k in HYS , blow 5k on stupid shit, use future 4k monthly savings to max out 401k and IRA and then reinvest in balanced portfolio and then strippers and blow 

 

End result = Profit???

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20 minutes ago, nineliveslost said:

ok. Plan moving forward is to set price sell limits and liquidate to 150-155k. Assume 25-30k for capital gains. Pay off all debts (100k), stash 20k in HYS , blow 5k on stupid shit, use future 4k monthly savings to max out 401k and IRA and then reinvest in balanced portfolio and then strippers and blow 

 

End result = Profit???

Sounds like a good plan. I believe a better plan for your future is to invest your remaining 20k in a higher risk/better producing fund. No need to be conservative at your stage, especially since you already have retirement accounts. 
 

* Taking your username into consideration makes me think you should live like there’s no tomorrow. Put it all on black while draped with hookers and pockets full of blow.

Edited by Coelenterate Fuccboi
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4 minutes ago, Coelenterate Fuccboi said:

Sounds like a good plan. I believe a better plan for your future is to invest your remaining 20k in a higher risk/better producing fund. No need to be conservative at your stage, especially since you already have retirement accounts. 

How much risk and what fund do you suggest should a 52 year old go with? Back in the stock market ? I got balls , they just hang lower now so they tend to be a little more sensitive and leery. Fuckers that do my IRA only give me a 4% return. 

I have about 4k in the Yotta shit , but their returns give me a headache figuring APR

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Just now, nineliveslost said:

How much risk and what fund do you suggest should a 52 year old go with? Back in the stock market ? I got balls , they just hang lower now so they tend to be a little more sensitive and leery. Fuckers that do my IRA only give me a 4% return. 

You’re asking the wrong guy. I don’t think I’ll ever be very conservative, but if you’re not relying on the money, why be conservative?

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2 minutes ago, Coelenterate Fuccboi said:

You’re asking the wrong guy. I don’t think I’ll ever be very conservative, but if you’re not relying on the money, why be conservative?

Man you make sense. I only got in this situation from luck and being fortunate at the right time. Didnt plan on any of it. 

I think I will still put the 20k in the savings account with the other money and keep the 6-9 months salary rule going. Be a little more aggressive with the 4k a month savings and see what road that brings me 

 

Thanks for the info and insight 

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How much risk and what fund do you suggest should a 52 year old go with? Back in the stock market ? I got balls , they just hang lower now so they tend to be a little more sensitive and leery. Fuckers that do my IRA only give me a 4% return. 
I have about 4k in the Yotta shit , but their returns give me a headache figuring APR

Are you asking about retirement account (IRA or 401k funds) or regular investments?

I’m 54, in a profession (law) where we work until we die, and have a brokerage retirement account through our firm. Balls to the wall aggressive. But it being in a 401k, I can sell high and buy dips without any short term tax consequences. So that’s a big factor in answering your questions

EDIT - Note to self...read up-thread before responding
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2 minutes ago, MirrOlure said:


Are you asking about retirement account (IRA or 401k funds) or regular investments?

I’m 54, in a profession (law) where we work until we die, and have a brokerage retirement account through our firm. Balls to the wall aggressive. But it being in a 401k, I can sell high and buy dips without any short term tax consequences. So that’s a big factor in answering your questions

401k and old man catch up will be yearly maxed and moderately aggressive. IRA is not maxed but will be soon and is moderately aggressive.  

Currently have 1.2 m and expect it to double every 5 years . Expect minimum 2.5m at 60 and then checking the fuck out. yes yes I am not the Surly kajillionaires 

I was talking about regular investments. Should a dip my low hanging large shriveled balls into the stock market again after gettign out with a nice gain or say fuck it and chill. 

 

Yes I have been drinking...hmmmm yes, I am almost drunk 

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1 hour ago, nineliveslost said:

 

 

48 minutes ago, nineliveslost said:

401k and old man catch up will be yearly maxed and moderately aggressive. IRA is not maxed but will be soon and is moderately aggressive.  

Currently have 1.2 m and expect it to double every 5 years . Expect minimum 2.5m at 60 and then checking the fuck out. yes yes I am not the Surly kajillionaires 

I was talking about regular investments. Should a dip my low hanging large shriveled balls into the stock market again after gettign out with a nice gain or say fuck it and chill. 

 

Yes I have been drinking...hmmmm yes, I am almost drunk 

If you have pretty good job security with that extra 4k coming in, you have a lot of room to be riskier, but everyone's risk tolerance varies. I despise the idea of getting 1-2%, which is essentially losing money because of average inflation. So if I'm you and don't want to spend more time on individual stocks, I'd put the 20k in an S&P or NASDAQ index, or a small business index if I'm feeling riskier. If you're wanting to diversify your risk, you could put it in something like gold or bitcoin, or maybe even a down payment on a rental property that you expect will increase in value and whose rent will more than cover the mortgage. Just some brainstorming.blockquote widget

Edited by KYHorn
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1 minute ago, KYHorn said:

S

 

If you have pretty good job security with that extra 4k coming in, you have a lot of room to be riskier, but everyone's risk tolerance varies. I despise the idea of getting 1-2%, which is essentially losing money because of average inflation. So if I'm you and don't want to spend more time on individual stocks, I'd put the 20k in an S&P or NASDAQ index, or a small business index if I'm feeling riskier. If you're wanting to diversify your risk, you could put it in something like gold or bitcoin, or maybe even a down payment on a rental property that you expect will increase in value and whose rent will more than cover the mortgage. Just some brainstorming.

See the source image

That's what i am talking about . Good advice man

 

So I own property but I am no slum lord and hate dealing wth it 

I have gold , but not Texas University vault full. 

I like S&P or NASDAQ index. Sounds like I will drop shit in there after the 6 to 9 months security savings 

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On 3/16/2021 at 4:05 PM, BLKNSTY said:


MSOS, MSOS, MSOS. The future of US weed is Cresco, Trulieve, Green Thumb, and Curaleaf. They will be the Walmart, Target, Costco, and Kroger of weed in the US. And those are MSOS’s top 4 holdings.
I could see diversifying but I honestly wouldn’t touch those Canadian Producers.

Lots of talk about federal legislation.  Fingers crossed.

https://www.politico.com/news/2021/04/03/schumer-senate-marijuana-legalization-478963

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Just opened a Roth in addition to my traditional brokerage account.  Apparently I can transfer individual stocks from my traditional brokerage account into the Roth as a contribution?  This will help me avoid capital gains tax.  I thought I would be limited to contributing only cash to the Roth, then investing with that cash.  In other words, I  was planning on selling stocks in my brokerage account and use that cash to contribute to the Roth.  That seems dumb now.  Am I missing something?

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40 minutes ago, Hmmm said:

Just opened a Roth in addition to my traditional brokerage account.  Apparently I can transfer individual stocks from my traditional brokerage account into the Roth as a contribution?  This will help me avoid capital gains tax.  I thought I would be limited to contributing only cash to the Roth, then investing with that cash.  In other words, I  was planning on selling stocks in my brokerage account and use that cash to contribute to the Roth.  That seems dumb now.  Am I missing something?

Nvm.  I can't do that.  Need to convert securities to cash before I can contribute to Roth.

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When is the big correction?  I have read so many articles that warn of the big correction, and now am playing the waiting game.  One alternative theory I read was that the stimulus would put off a correction until closer to the fall.  

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40 minutes ago, orangecat92 said:

When is the big correction?  I have read so many articles that warn of the big correction, and now am playing the waiting game.  One alternative theory I read was that the stimulus would put off a correction until closer to the fall.  

Timing the market is kind of a fools game. Keep pounding your money in over time and dollar cost average the highs and lows. Keep a little cash on hand in case it really takes a shit, you can scoop good shit on sale. 

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8 hours ago, orangecat92 said:

When is the big correction?  I have read so many articles that warn of the big correction, and now am playing the waiting game.  One alternative theory I read was that the stimulus would put off a correction until closer to the fall.  

Bears have predicted 200 of the last 3 corrections. 

“Smart” people call the tops all the time. But they’d rather that reality conform to their (well-constructed) narrative, rather than the other way around. 

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4 hours ago, Cheeseweasel said:

People who predict bad news in the Market are consistent. If you say it enough times, you'll get it right eventually. FWIW, they are usually selling something (Gold).

1234

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6 hours ago, Cheeseweasel said:

People who predict bad news in the Market are consistent. If you say it enough times, you'll get it right eventually. FWIW, they are usually selling something (Gold).

They are just like economists who correctly predict 27 of the last 3 recessions/corrections

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News going around that jpmorgan has a block of 9m shares up for sale for ASO.. academy sports...

That represents 32% of the float....someone getting margin called???

Let's see if things get crazy....

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  • 2 weeks later...
NFLX down 10% AH after some really disappointing subscriber numbers.  Tomorrow should be fun 

There just isn’t shit worth watching on it anymore. Thanks for reminding me, just canceled mine
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